Obama’s Second-Term Agenda Faces Big Chill

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Hawaii, the nation’s 50th state and its most isolated and exotic paradise, is not only President Obama’s birthplace and annual holiday getaway. It’s also his political utopia.

Four decades before Obama’s Affordable Care Act, Hawaii enacted its own sweeping health-care mandate. To lift the economy, the state has poured billions of dollars into rebuilding highways and infrastructure, bringing the unemployment rate down to an enviable 4.4 percent. Gay marriage is legal, immigrants are welcomed, labor unions are strong and — if the governor gets his way this year — universal pre-kindergarten will be the law of the land.

On this string of volcanic islands, there are no Tea Party stars to bicker with and no Congress to stand in the way. There’s hardly a viable GOP: Just one of Hawaii’s 25 state senators is Republican. The Aloha State, with its liberal governor and overwhelmingly Democratic legislature, has succeeded in achieving much of the vision Obama has yet to accomplish on the mainland.

After spending two weeks on Oahu’s lush fairways and white-sand beaches, Obama plans to return this weekend to Washington, where the cold, iced-over roads could be a metaphor for the gridlock he will need to overcome if he hopes to reboot his second-term agenda.

“I think there’s a lot of similarities between the policies he’s interested in and the way that people in Hawaii think about the world and think about each other,” said Carl Bonham, executive director of the Economic Research Organization at the University of Hawaii. “We have a better safety net, we’ve had near-universal health care for a long time, and we’re a heavily unionized state, so there’s a tendency that leads to better wages.”

But there are limits to applying the Hawaii model to the rest of the nation, especially considering this state’s unique economy and political makeup.

Hawaii’s extraordinary reliance on the federal government — military spending accounts for 13.5 percent of the state’s economy, more than any other state except Virginia — has helped cushion the state from economic turmoil. The recession in 2009 pushed Hawaii’s unemployment rate to 7.1 percent, but it has fallen to 4.4 percent as of November — tied with four other states for fifth-lowest. That compares with a decline nationally from 10 percent to 7 percent.

The cost of living is higher than on the mainland, with the prices for everything from milk to bread to paper inflated to cover high shipping expenses. Livable land is scarce, making housing relatively expensive, and there are pockets of extreme poverty. Costs for energy, from gas for cars to electricity in homes, are high as well.

With more than 8 million visitors coming annually and a large tourism industry, there is also not much of an immigration debate here. The resort hotels that soar above Waikiki Beach, most of which are unionized, employ thousands of immigrants from the Philippines, Japan and China.

“We don’t have this border problem,” Gov. Neil Abercrombie (D) said in a recent interview. “We don’t worry about that in Hawaii. We welcome people coming because the hospitality industry in particular— we’re ready for immigrants to come in because everybody works, everybody wants to succeed.”

At the State Capitol in Honolulu, Democrats have largely been in control since the islands achieved statehood in 1959. The exception was from 2002 to 2010, when Linda Lingle, a moderate Republican, served two terms as governor. The state gave Obama his biggest margins outside of the District of Columbia. In 2008, Obama carried Hawaii 72 percent to 27 percent; in 2012, 71 percent to 28 percent.

Mostly one-party control has made Hawaii an incubator for progressive policies. In 1974, when Obama was living in Hono­lulu, the state passed its prepaid health-care law — landmark legislation that required all businesses to offer health insurance to employees who worked more than 20 hours a week. Hawaii also has put itself at the leading edge of clean energy development and initiatives to reduce greenhouse gases.

“We have always been and continue to be a liberal or progressive social laboratory,” said state Sen. Sam Slom, the chamber’s lone Republican.

Coincidentally, Slom said he lived one floor below Barack Obama in the Punahou Circle Apartments in the 1970s. Obama was living there with his grandparents while attending high school, and Slom said he worked at the Bank of Hawaii alongside Obama’s grandmother, Madelyn Dunham. Slom said Hawaii “languishes in missed opportunities” to attract businesses because its state taxes, regulations and environmental rules are too onerous. “If this were the thing that the president looks to as being the panacea, he should talk to some of the people who have to struggle here. It’s a beautiful place, the people are wonderful, but the business climate is hostile.”

Abercrombie, a former leftist student activist who befriended Obama’s parents at the University of Hawaii, governs as a liberal Democrat. He said that despite the overwhelmingly Democratic control of state government, there is plenty of disagreement within the legislature. “It’s not all sweetness and light,” Abercrombie said. “They clash with one another. You have individual ambitions.”

Although Hawaii has been at the forefront of progressive economic and social welfare policies, it is less predictable on cultural issues. On these islands, first settled by Polynesians and later by white Americans and Asians, there is a long plantation history, and ­socially conservative churches are relatively powerful. On Oahu, the state’s most populous island, there is a large temple and a satellite campus of Brigham Young University to serve Hawaii’s Mormon population.

Many Hawaii residents are proud supporters of the Second Amendment; walking around the streets of Hono­lulu, you see advertisements for indoor shooting ranges, where people fire semi­automatic AK-47s above the luxury boutiques that dot the Waikiki Beach strip. The push to legalize same-sex marriage in Hawaii took longer than many backers expected, slowed by strong objections from religious leaders and a protracted debate in the state legislature.

When Abercrombie took office in late 2010, he faced what he called “an all-around fiscal disaster.” The state had a $220 million shortfall, and unfunded liabilities from its pension system soared into the billions. After a series of painful cuts — including reducing government salaries by 5 percent and slashing health-care premium support for workers — the state last month announced a positive balance of $855 million.

Hawaii spent $1.2 billion last year on infrastructure improvements and has budgeted an additional $2.2 billion for fiscal year 2014 — stimulus spending Abercrombie credits with helping bring down the unemployment rate. These projects, coupled with population growth of about 1 percent a year, have helped spur a construction boom in Hawaii. To meet growing demand for housing, there are more than a dozen high-rise buildings planned or under construction in downtown Hono­lulu, plus other large residential projects elsewhere in the state.

“I’m putting out more than a billion dollars a year now in capital improvement projects — not just for construction’s sake, but for infrastructure’s sake. Airports, the harbors,” Abercrombie said. “I’m rebuilding the H-1 freeway. We’re not resurfacing it; we’re rebuilding it.”

This is the kind of infrastructure spending Obama has long advocated for the country but has had little success achieving since the 2009 stimulus. “Obama can think about this in wistful ways,” said Neal Milner, a professor of public policy at the University of Hawaii. “But it’s not like he needs the ideas from Hawaii, and it’s not like he can learn lots of lessons about how to get it done from Hawaii. . . . We’re not doing any policies that are conceptually different, but we can do them in ways that he doesn’t have a chance of doing in Washington.”